Kyle Bass has been a well-known bear on the yen and JGB for a long time now.
Those bets have not been profitable. Its recent decline notwithstanding, the yen has been a monster gainer.
JGB yield are as low as ever, and the earthquake has actually sent yields lower, which has sent people’s heads spinning.
But given the earthquake, Bass is looking for more money from folks who think that this time, things are really going to hit the fan.
Via Dealbreaker, here’s the note from Bloomberg:
Bass had an interest in Japan before the country’s biggest earthquake struck on March 11 because of its “fundamentally unsustainable” fiscal and monetary policy and demographic challenges including an ageing population, according to a presentation to investors…Bass is positioning the fund for an increase in 5-, 10- and 30-year Japanese interest rates and the yen’s decline against the US dollar, the presentation said. Japan won’t be able to fund its deficits domestically and will be forced to borrow international capital at high interest rates, according to the presentation. [The fund’s] assets are $101 million. The minimum investment is $250,000. The fund charges a management fee of 1.25% of assets and a performance fee of 20 per cent of profits, paid after capital is returned to investors. It has a three-year investment horizon during which investments are locked up.
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